The second quarter industry survey by Transport Capital Partners (TCP) shows many trucking companies still are not seeing adequate rates of return, nor are they getting any relief in their ability to renegotiate accessorial charges.
Just over 50% of carriers believe they are getting the rates of return needed to justify further investment in new equipment. This is up only four percentage points from November 2012.
With many fleets reporting inadequate rates of return, it is understandable that one-third of all carriers do not intend to add new equipment. Replacement of aging trucks, tractors, and trailers remains the primary driver of equipment purchases.
“Higher equipment costs in recent years, combined with the lower utilization resulting from new HOS (hours-of-service) rules, will continue to make adequate returns on investment a challenge,” says Steven Dutro, TCP Partner.
The TCP survey reported that 73% of carriers expect rates to rise over the next 12 months. However, 45% of carriers still do not believe they will be able to renegotiate accessorial charges. Most likely in response to pending changes in hours of service, 43% do believe they will be able to address detention times.
While carriers across the board expect rate increases in the next 12 months, larger carriers are significantly more confident than smaller carriers that they will be able to raise accessorials. Sixty-four percent of smaller carriers see no relief in accessorial charge negotiations. In contrast, only 37% of larger carriers believe they will be unable to renegotiate accessorial charges.
“As freight demand grows shippers who need consistent service will need to assist carriers in gaining operational efficiency and adequate compensation,” says Richard Mikes, TCP Partner. “Larger carriers are more confident they are positioned to achieve this customer cooperation.”